CFPB to make complaints about lenders public

The Consumer Financial Protection Bureau (CFPB), the federal agency which is looking to have regulatory oversight of the captive auto lending market, is finalizing a policy to empower consumers to voice publicly their complaints about consumer financial products and services.

When consumers submit a complaint to the CFPB, they now have the option to share their account of what happened in the CFPB’s public-facing Consumer Complaint Database.

“Consumer narratives shed light on the full consumer perspective behind a complaint,” said CFPB director Richard Cordray. “Narratives humanize the problems consumers face in the marketplace. Today’s policy will serve to empower consumers by helping them make informed decisions and helping track trends in the consumer financial market.”

Since its creation in 2011, the CFPB has handled 558,800 complaints, with mortgages and debt collection being the most frequent topics. In autumn last year, the agency indicated it wants to expand its oversight of the auto loan market from the current focus on banks’ automotive lending divisions to include non-bank auto finance companies.

The agency said it wants to define companies in this category as “larger market participants” if they enter into or otherwise acquire 10,000 or more loans, leases and and/or loan refinances per year. It also wants to define auto leasing as a financial product subject to regulation.

These proposals are currently subject to consultation and have attracted strong reaction within the auto lending industry. Should they go ahead then all the major lenders, including most of the captives, will fall under the CFPB’s remit. That would mean any individual who submits a complaint about poor or unfair lending practices from an auto finance provider to the CFPB will have the option to share their story publicly.

In a statement, the agency said: “The narratives will provide context to complaints, spotlight specific trends, and help consumers make informed decisions. The narratives may encourage companies to improve the overall quality of their products and services, and more vigorously compete over good customer service.”

Companies will be under no obligation to offer a public response, but will be informed immediately a complaint about them has been made. They have 180 days after the consumer complaint is routed to them to select the optional, public response. Companies will have the option to address all consumer complaints submitted after this policy announcement, not just those where a consumer consented to publication.